Fiat Bets on Italian Elegance to Challenge Nissan’s Leaf

Nov. 28 (Bloomberg) -- Fiat SpA Chief Executive Officer
Sergio Marchionne is no champion of electric vehicles. So even
if he must produce one to appease California regulators, he
won’t mess with an Italian icon.

After returning to the U.S. with its 500 subcompact in
2010, Fiat plans to introduce an electric version at the Los
Angeles Auto Show today. Chrysler Group LLC, majority owned by
Fiat, will begin selling the battery-powered 500e next year.

Fiat is betting the car will benefit by staying close to
the styling of the gasoline-powered 500 promoted by celebrities
Jennifer Lopez and Charlie Sheen. That represents a departure
from the strategy of Nissan Motor Co., which has struggled to
draw buyers to its unconventionally styled Leaf electric car.

“Let’s be honest, ugliness is probably one of the worst
forms of pollution,” Matt Davis, head of Fiat brand product
marketing, told reporters this month during a briefing at
Chrysler’s domed design center in its Auburn Hills, Michigan,
headquarters. “The Fiat 500e proves that you do not have to
give up on good looks to deliver an electric car.”

The 500e joins General Motors Co.’s Chevrolet Spark EV and
Bayerische Motoren Werke AG’s i Concept among electrics at the
Los Angeles show, opening to the media today. California, which
has accounted for more than 11 percent of U.S. auto sales this
year, requires the biggest automakers to sell increasing numbers
of what it calls zero-emission vehicles.

Losing $14,000

Marchionne, 60, has said natural gas and diesel engines and
more efficient conventional powertrains are better options for
creating greener cars than plug-in hybrids or electrics. While
the company hasn’t set a price for the 500e, Marchionne in
October said Fiat will lose about $14,000 on each one it sells.

So far, Nissan and other manufacturers of electrics have
struggled to line up buyers. Deliveries of Nissan’s Leaf fell 16
percent to 6,791 this year through October, according to
Autodata Corp. The Japanese automaker won’t reach this year’s
sales target of 20,000, CEO Carlos Ghosn told Bloomberg
Television this month.

“For first movers into a certain segment, history will say
whether they were brilliant or idiots,” said Larry Dominique,
president of auto consulting firm ALG Inc. and the former head
of product planning for Nissan. “Near term, it could look like
they made a bad bet. Long term, it may pan out.”

Snubbed Leaf

Critics of electric cars, Marchionne among them, have said
battery costs and range may limit demand for electric cars. Fiat
is positioning the 500e as the battery-powered option for buyers
who have snubbed Nissan’s Leaf for a reason many cars fail to
find a market: its looks.

Exterior styling is the biggest issue keeping consumers
from buying the Leaf, according to a survey of more than 24,000
new-car buyers by J.D. Power & Associates. While styling was
also a concern about GM’s plug-in hybrid Chevy Volt and Toyota
Motor Corp.’s Prius, purchase price and performance were more
commonly cited problems among those who passed over those cars,
J.D. Power said.

“If people can’t past the exterior, it doesn’t matter what
else you have to offer,” said Dominique.

Before he left Nissan, Dominique said, his team “fought
pretty hard” to make the Leaf “at least directionally
mainstream.” Ghosn’s original design, he said, “was much, much
more futuristic.”

Some of the Leaf’s “distinctive” components, such as its
headlamps, serve functional purposes including increased
aerodynamics and reduced wind noise, Brian Brockman, a Nissan
spokesman, said in an e-mailed statement.

‘Instantly Identifiable’

“We heard from our target customers that they wanted a car
that is instantly identifiable as an electric car, and the
design of Leaf sets it apart from other vehicles on the road,”
he said.

The 500, an update of the 1950s original featured in the
film “La Dolce Vita,” arrived in European showrooms in 2007
and U.S. dealerships last year. To make the 500e more
aerodynamic, designers added mirror caps, side sills, and a
spoiler mounted on the rear liftgate that extends the roofline.
Airflow inlets were added to the front to cool the battery.

The company says the exterior changes add the equivalent of
about 5 miles (8 kilometers) of range compared with a simple
electric version of the base car design. Fiat says the car will
get the equivalent of roughly 116 miles per gallon in city
driving, though those figures haven’t yet been certified by the
U.S. Environmental Protection Agency.

500e’s Acceleration

The 500e will go from zero to 60 miles per hour in about 9
seconds, according to Fiat, based in Turin, Italy. Gasoline-powered 500s take between 7 and 11 seconds to reach that speed.

“We’re not going to sell it as ‘Here’s an electric
offering,’” Tim Kuniskis, head of the Fiat brand for North
America, told reporters this month. “It’s going to be, here’s a
Fiat 500 that also has a great electric powertrain.”

Fiat will introduce the 500e in phases beginning with
California. In spite of the losses the company maintains it will
suffer for each one it sells, Fiat said production won’t be
capped at the level required to comply with regulations in
California and other states adopting its mandates.

“We’ll build every one that there’s demand for,” said
Davis, the Fiat marketing executive. “We want to make this a
mainstream approach.”

While the Leaf has been disappointing for Nissan,
automakers have also struggled in adapting existing models with
hybrid or electric powertrains.

GM no longer builds hybrid versions of its sport-utility
vehicles after sales trailed expectations, and Ford Motor Co.
has sold a limited number of Lincoln MKZ hybrids even after
pricing it the same as the gasoline-only version. Ford hasn’t
broken out sales figures for the electric version of its Focus
compact, which it introduced late last year.

“As soon as you put an alternative powertrain into an
existing vehicle, it draws comparison on a pure economic point
of view,” ALG’s Dominique said. Customers may ask whether it’s
worth paying the extra money and “‘what’s my benefit?’” he
said. “The whole industry used to joke that the payback on most
hybrids was ‘Never.’”